Retail banks have traditionally provided payment services to small businesses and individuals involved in a large volumes of low cost transactions. It is nowadays difficult to classify retail banks because the majority of banks offer wholesale and retail activities. Technological developments, also enable these banks to provide a number of retail monetary services to its clients. Retail banks also offer insurance products, pension schemes, and stock services.
Northern Rock is a British bank that was harmfully affected by the United State subprime market fall down in 2007. However, the British government in February 2008 took control of it after it collapsed. On the other hand, the Building Societies Association in the United Kingdom claims that the subprime mortgages and loans to persons whom failure to pay their own loans, were not the primary reason of Northern Rock's meltdown. (Craido and Van Rixtel, 2008).
Northern Rock required emergency support by the Bank of England for the reason that it funded loans using extensive money markets, which included grouped subprime mortgages, instead of using money put in by retail savers (Barbara, 2006, p. 14-15).
For a bank to attract a lot of customers, it has to come up with strategies on how to do it. Good strategies results to the growth of any business enterprise. Short-term profits culture among banks and combinations of investment banking and retail banking operations are linked with the collapse of the northern rock in this study we will analyze the features that make large retail banks unique in the economy and how these features contributed to the fall of northern rock (Mullineux, 2003, p. 8-12).
Features that make large retail banks unique in the economy
Good quality and fast delivery
One of the features that make large retail banks unique to the economy is their quality and fast delivery of the services they offer. Since most retail banks offer almost similar services, it is easy for customers to move from one bank to another, so the number of customers a bank acquires depends on the quality of the services that it provides. For a bank to be able to retain high number of client, it should come up with competitive products satisfy the needs of customers (Bankers Association (BBA). 2010, p. 6-9). Also, customers enjoy interacting with the bank using different mediums. Therefore, large banks offer quality services through a variety of channels like ATMs, internet banking, branches and mobile banking.
Acting on unexploited areas of business
Large retail banks have a feature of acting on idle potential and increasing volumes of business. The ability to tap the unexploited market gives these firms a room for growth. Customers have varying preferences; they are willing to take loans for their personal desires which mean that banks have a lot of possible opportunities lying in this section. Large banks give their employees special training so that they can be able to...